Bill to be introduced in Colorado would increase property taxes on short-term rentals by 4x the value
Bill co-sponsor, Chris Hansen, State senator for district 31, admitted right off the bat the first draft of Bill 6 (now Senate Bill 33) needed adjustment.
"Lots of conversations since then and we're planning some big adjustments to it as it moves through the process," Hansen said.
So what was the bill proposed (and supposed) to do? Hansen said he's trying to fix discrepancies in tax rates for places renting rooms or beds.
"I think the short answer is we're really trying to make sure that there's a tax fairness and tax equity and that the services that are required by different types of properties are correctly categorize and paid for."
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His example was hotels who end up filing taxes as a residence instead of a large company in order to avoid larger tax rates, and pocketing money that could otherwise be going to the local school districts or emergency services (if the county so chooses).
"I think there are few clear examples where this is a tax loophole," Hansen said.
"The Sheraton Hotel in Steamboat, I think is the most egregious example, but there are others that are like that that, you know, it's a hotel," Hansen said, laughing. "As my dad would say, if it walks like a duck and quacks like a duck, it's probably a duck."
The bill would assess how many days a rental would be used, and try to base tax rates around that meter. From the bill's current language "If, during the previous property tax year, a short-term rental unit was leased for short-term stays for more than 90 days, then it is classified as lodging property. Otherwise, it is classified as residential real property. "
That's where a lot of the fuss is now coming from.
Steven Frumess with the property management company in Breckenridge called Alpine Edge said that's the difference between a short-term rental being taxed at 6.7% for property taxes...to 27%. He believes a lot of his clients simply will not make a profit if this goes through, and will stop renting, which in turn, will deplete the short term rental options in mountain towns (and also put him and his colleges out of business.)
"There's hot tub technicians, there's cleaners, there's accountants, there's property managers, there's maintenance technicians of all kinds, handymen and all tradesmen that have to maintain these properties," Frumess said. "I'm worried this place will become a ghost town."
There's at the very least one second homeowner how has said as much. Kristine Lee and her husband built their second home in Summit County in hopes to rent it out as a short-term rental, part as an investment, and partially to pay for the expensive build.
"Midway through our build, the game has changed dramatically," Lee explained. Not only did Summit County establish a short-term rental cap for the number of times they can rent out the property, but if this bill goes through, it will also potentially raise her property taxes, squeezing her from either side.
"It is not fair to tax me when I'm limited in that capacity," Lee said. "We're also not a hotel."
Dylan Roberts, State Senator for District 8 has kept the housing crisis in front of mind as someone who knows the issues mountain towns are facing. He said he believes the bill needs work before he would consider supporting it.
"I think it is imprecise and could have really negative consequences for our tourism industry here in our mountain communities as well as economic impacts far beyond that," Roberts explained.
Still, Hansen said he believes in the bill he's currently ammending, and believes the cries of the people CBS Colorado interviewed were overblown.
"This happens with the capital where you get stakeholders," Hansen said. "You're like, the sky is falling and you're going to bankrupt me, etc., etc.. You know, look, we're not going to bankrupt anybody here."
